Government confirms self-builders’ exemption from CIL

The Department for Communities and Local Government believe that exempting selfbuilders from paying the Community Infrastructure Levy (CIL) will save the self-build housing sector thousands of pounds and encourage the construction of up to 3,000 currently ‘mothballed’ small housing projects.

The proposed levy would have added considerable construction costs, which in some cases would have made building properties unviable. A typical example might find a self-builder building their own four-bedroom, 150 sq m home being liable to pay £15,000 in CIL, if their local council was charging £100 per square metre for a residential development.

By axing the levy for people building their own home the government believes it is showing its determination to boost housing supply and help aspiring self-builders start work on their homes.

Relief from CIL will cover homes that are owner-occupied, built or commissioned by individuals, families or groups of individuals for their own use.

Commenting on the removal of CIL for this specialist part of the housing sector, Communities Secretary, Eric Pickles, said:

“Building your own home is always a challenge and we are doing what we can to help people realise their dream and provide a home for their family. This change will save self-builders thousands of pounds and help many more in the future.

“By boosting the numbers of people building their own home we can help increase the number of new houses built each year in this country and support local businesses. There are too many levies and charges on housing. By cutting these, we can help build more homes.”

Welcoming the initiative Chairman of the National Self Build Association, Ted Stevens, confirmed:

“It’s great news that the community infrastructure levy exemption for self and custom builders is now being implemented. We estimate that about one in eight self-build projects have been ‘mothballed’ over the last two years, because of the impact of this new charge, so we anticipate the exemption will have a significant impact on self-build starts, with 2,000 to 3,000 homes coming off the shelf and starting on-site in the next few months.

“This is good news for the people who want to build their own homes and it will also be good news for the supply chain and local construction related businesses that support the self-build sector.”

Exempting self-builders from CIL is the latest in a range of government measures to boost the number of people building their own home. Others include:

  • Making is easier to get a self-build mortgage: with the government speaking to lenders and encouraging 26 of them to now offer self-build loans, gross self-build lending is predicted to increase by almost half between 2012 and 2015 to £1 billion a year
  • Free more surplus public sector land for selfbuilders with the Homes and Communities Agency bringing forward a range of sites for custom build homes
  • The introduction of a £30 million Custom Build Homes Fund, which makes available repayable finance for larger multi-unit projects and grant funding for community self-builders who can now apply for a share of £65 million from the Affordable Homes Guarantees Programme
  • Planning guidance that makes it clear to councils that they should help self-builders and establish demand in their area; this includes compiling a local register of people wanting to build a home so they have priority when new brownfield sites become available

To clarify what the government recognises as self-build, their definition is:

“Self-build homes are homes built or commissioned by individuals or groups of individuals for their own use, either by building the home on their own or working with builders. Custom homebuilding typically involves individuals commissioning the construction of a new house from a builder, contractor or package company or, in a modest number of cases, physically building a house for themselves.”

This announcement follows closely on the heels of the Shadow Housing Minister telling the housing industry that Labour wants to create an army of small housebuilders to break the monopoly large housebuilders have on land purchase.

By David Mote